Photo by Zlaťáky.cz on UnsplashDiversification is key to a good investment strategy. Today we welcome a guest post on how to begin investing in gold. Why gold? It’s a good hedge against inflation and in terms of holding value, it’s one of the better assets out there. Enjoy!Most smart investors have some portion of their wealth invested in gold. This low-risk investment has been proven to aid in economic growth and stability, both for individuals and the nations that keep it. In fact, the ‘gold standard’ was a popular economic practice for much of the 20th century, and since the US banned it in the late 70s, the demand for gold has only increased.By learning how to effectively invest in gold, you’ll not only increase your financial literacy, but will be set to protect and grow your wealth. In this guide, we take you through three steps to follow to start investing.Identify Your GoalsOnce you’ve made the decision to invest, you want to make sure that you’re not going into it blindly, or taking the decision lightly. Whether or not your gold investment proves worthwhile will depend on your reasons for investing and both your short and long-term financial goals. For example, you’ll want to consider whether you’re saving for a big purchase, or perhaps for retirement or your family’s future – maybe you even have multiple financial goals that you’re looking to achieve through investing. Identifying your goal is key to discerning whether or not gold is the right investment for you.Gold investment is a great way to preserve your wealth, but it may not be the best route if you’re looking for something guaranteed to be lucrative. While you absolutely can make a profit, the main perk that comes with investing in gold is knowing that you have a certain level of financial security and protection against inflation and economic crises.Photo by Anne Nygård on UnsplashDecide On A StrategyIf you’ve identified gold as an investment that meets your needs, you’ll next need to think about which strategy will best help you to achieve your financial goals. For example, investment in physical gold bullion will provide you with a level of financial security that stocks and shares won’t – however, you’re less likely to make an immediate profit this way, and you’ll have the costs of storage to consider, too.If you’re looking to diversify your portfolio, a mutual fund may be a good option, as it’ll allow you to spread your investment over a variety of different commodities. Exchange-traded funds (ETFs) benefit from similar perks, but have lower expense ratios as they are passively managed. ETFs and mutual funds are considered to be the best options for the average investor – for most, investing in a vast amount of physical gold presents practical issues that most prefer to avoid.Balance Your AccountsWhen it comes to investing, the best way to limit risk is to spread your investments across multiple assets. If you have other investments besides gold, you’ll want to reassess how your funds are allocated, and make tweaks as necessary – this is called balancing your accounts. Your gold investment should make up about 10-15% of your investment portfolio in total, so you want to make sure that you keep your eye on the numbers across all your accounts after making your initial investment in gold.Similarly, if gold is your very first investment, it’s worth now starting to look into other options to protect and grow your finances further. This is a great time to reassess your financial goals. Could you benefit from investing in another asset, or would it make sense for you to buy stocks and shares in a lucrative company? For a steady, reliable investment income, you’ll want to make sure you have fingers in multiple pies.Photo by Alexander Mils on UnsplashMeasure your successGold investment is a great way to achieve financial stability, and it’s always best to get started sooner rather than later for maximum economic protection and benefits. If you make the commitment to measure your success long term, you’re more likely to stay on track to reach your goals and reap the rewards of your investment.Author bio: Daniella BakerDaniella is passionate about helping people to grow their wealth. She regularly delivers talks on the importance of economic security, helping keen investors to take control of their finances and achieve financial freedom.